News Column

The Strategic Planning Payoff

June 2002, HISPANIC BUSINESS Magazine

Scott Williams

The rider chooses the path but the horse must walk it,” writes management consultant Alex Haim in his book Making Horses Drink (Entrepreneur Press, $19.95). In business, that means developing a growth-oriented strategic plan that benefits all participants and attracts their support.

“Position yourself so that when growth does occur, you’ve done all the right things and … you can support that growth,” advises Francisco Garcia of IITC in Colorado, the number 232 company on the Hispanic Business 500®. “We put systems in place before we need them, so if we do everything else correctly and the work comes in, we can continue to grow.”

Early in his company’s history, Mr. Garcia looked to technology to help manage growth. The CEO bought an accounting system for $10,000 that was tailored specifically for the defense contracting industry in which IITC operates.

The investment paid off: IITC has had an annual compounded growth rate of 23 percent during the last five years, and revenues grew 78.6 percent last year, despite a soft economy. “I’m going to invest that $10,000 because I know that down the road I’m going to need it,” Mr. Garcia observes.

Kurt Kenyon, a Hispanic management consultant at Kenyon International of San Antonio, points out that every business intends to grow, yet few companies have a plan to show how they’re going to get there. Thousands of companies never bother to prepare a written business plan; in contrast, an impressive 82 percent of the Hispanic Business 500 have a roadmap for success.

Wendel P. Torres, CEO of the general contracting firm Torres & Associates, says periodic reviews of his plan help his supervisors by telling them how much revenue comes from repeat customers and where to look for new opportunities. “We sit down and put down on paper what we feel the company should be for the coming year, and also get input from management on where they feel it should grow,” he says. As a result of careful planning, Torres & Associates increased revenues to $11.33 million in 2001 from $2.02 million the previous year – a 460 percent jump. The company ranks number 322 on the Hispanic Business 500 this year.

Working on the plan forces managers to confront the big picture rather than focusing on internal processes. Mr. Kenyon says companies must look to the future to determine what sort of investments they’ll need for expansion, and how they intend to pay for them. Regularly updating the business plan forces a CEO to monitor macro-economic conditions, competition, and the industry in general.

Tracking revenues is key to opening the opportunity box, according to Mr. Kenyon. He recalls one client, a law firm in Houston, that planned to discontinue providing wills until a look at its income showed that wills accounted for 60 percent of its business. The firm hadn’t realized the importance of this revenue source because the money came in relatively small amounts compared with larger fees for other legal services.

As a byproduct of putting together a strategic business plan, you’ll make your bankers and investors happy, Mr. Torres points out. “It gives them comfort to know that you have some projections,” he says, “and have taken time to map out how your company is going to grow and … what changes you can make down the road to achieve your goals.”




Source: HISPANIC BUSINESS magazine


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